SME Communicator - December 2011
SME Communicator - December 2011
Private Groups and Risk
Following up on last month's feisty live chat, SME Community members were asked their views on the ATO's planned shift to a 'Private Groups' approach in assessing personal wealth.
Most members responded positively saying the concept made sense and was easy to understand - some added they were surprised the ATO had not taken this approach earlier.
A discussion on the Risk Differentiation Framework the ATO is now using within the small-to-medium enterprise (SME) market found most respondents aware of this approach to assessing risk. However while one of the intended benefits of using the framework is to provide greater transparency for SME's, some members were sceptical arguing their businesses already have comprehensive systems in place for identifying risk factors.
Sticking with the 'risk' theme members were also asked what their main areas of concern were when it comes to non-compliance. Most suggested there were no particular issues at all - strong internal processes, good record keeping and having quality staff ensured they were compliant. Employing quality external tax professionals was also important.
While some members did suggest payroll tax is perhaps one challenging area, the main issue for most seemed to be the non-productive cost to SMEs in meeting their ongoing compliance obligations.
Finally, a live chat on compliance was held with Assistant Commissioner Elizabeth Gamin who is responsible for compliance in the SME area. The chat covered many of the compliance issues facing business and provided insights into how the ATO case selects. Members of the community can access the transcript online.
If you consider ceasing routine farming activities for a period of time before the sale of the land, you should consider Goods and Services Tax Determination GSTD 2011/2 which was released on 16 November 2011.
This determination clarifies that the sale of farm land may be GST-free if a farming business has been carried on continuously for at least five years prior to the sale, except for a break which occurs as a result of sale.
However, where enterprise of the farm business has ended before the sale of the farm land, it is not GST-free if the land is used for some other purpose prior to its sale.
A number of examples which will help you determine if the sale of your farm land may be considered to be GST-free are provided in the determination.
This determination applies both before and after its date of issue.
For more information, refer to GSTD 2011/2: Goods and services tax: can a 'farming business' be carried on, for the purposes of paragraph 38-480(a) of the A New Tax System (Goods and Services Tax) Act 1999, where there has been a cessation of routine farming activities by the supplier for a period of time as a consequence of a decision to sell the land?
In late December 2011, we plan to upgrade our processing system for pay as you go (PAYG) and fringe benefits tax (FBT) instalments. We expect the impact to be relatively minor. The upgrade is planned to occur during our regular Christmas closure.
We are letting the community know how this upgrade will affect:
- our system availability
- our form processing
- what you might see when you receive an instalments notice.
We want to deliver a tax system that is fair and provides a level playing field for all business.
To help achieve this we have received extra funding to expand our compliance activity to identify non-lodgers and detect businesses that over-claim entitlements or deliberately under-report income.
Our lodgment enforcement work is focused on identifying and bringing to account taxpayers who are not lodging activity statements or income tax returns and often ignore repeated requests from us to get their affairs in order.
We encourage you to review your activity statement and income tax obligations and check you are lodging correctly, and on time.
We will be contacting you if your lodgment is not up to date. For those choosing to disregard the law and work outside the tax system, there will be serious consequences including interest, penalties and prosecution.
If you think you might lodge or pay late, it is important you contact us early to check if alternate arrangements can be made. Even if you can't pay on time, you still need to lodge your activity statement by the due date.
In the Compliance program 2011-12 we undertook to commence Taxation of Financial Arrangements (TOFA) implementation reviews, in addition to continuing our education and assistance activities. These reviews will look at:
- identifying taxpayers who meet the TOFA thresholds to ensure they are applying the TOFA rules
- restructuring financial arrangements prior to entry into TOFA
- calculating the balancing adjustment for TOFA taxpayers who have made the transitional election to bring in their existing financial arrangements
- the validity of elections made under the TOFA rules
- the appropriate application of the TOFA tax-timing methods, including compliance with the hedging method recording requirements.
To facilitate these reviews we have developed a TOFA implementation questionnaire in consultation with industry representatives. The questionnaire is currently being piloted with a select number of taxpayers.
It is timely, now that the first TOFA year has finished for most TOFA taxpayers, that you review your TOFA implementation to ensure you are applying the TOFA rules correctly.
Remember, you need to make superannuation contributions to your employees' chosen super funds by 28 January 2012 for the quarter 1 October - 31 December 2011.
If you are an employer and you don't pay the minimum super contributions for the quarter by this date, you must pay the super guarantee charge and lodge a Superannuation guarantee charge statement - quarterly by 28 February 2012.
To help you work out if you need to pay super for your workers, use our Superannuation guarantee (SG) contribution calculator. This helps you calculate your super guarantee obligations. It will save you time and is easy to use.
To suit your business, you can calculate and print weekly, fortnightly, monthly or quarterly super guarantee contributions.
If you are unsure if an employee is eligible for the superannuation guarantee, use the Superannuation guarantee eligibility decision tool prior to using this calculator. The decision tool will also help you work out if you need to pay super for your employees, and summarises your super obligations for eligible employees.
To work out if you have contractors who are eligible to receive super contributions, use the Employee/contractor decision tool.
Remember, any super contributions you make are tax deductible - however the super guarantee charge is not.
For more on super including our online tools, visit Employers superannuation - home.
From 1 January 2012, if you have an employee who works temporarily in either Austria or Slovak Republic, you may be covered by a bilateral social security agreement. This agreement removes the issue of double super coverage, provided you obtain a certificate of coverage from us.
Double super coverage occurs when an employee works temporarily in another country and that country, as well as Australia, requires super guarantee (or equivalent) contributions to be made for the same work undertaken by the employee.
Under the new agreement, you will not have to make compulsory super (or equivalent) contributions in Austria or Slovak Republic, provided you continue making compulsory super contributions under Australia's super guarantee law.
Australia also has social security agreements with many other countries.
Keeping a grip on international dealings
We are introducing a new income tax schedule for income years commencing on or after 1 July 2011 - the international dealings schedule (IDS).
You will need to complete an IDS 2012 if you operate a company, partnership or trust that has certain international dealings, some of which have thresholds. For example, a $2 million de minimus amount for international related party dealings.
Standard arrangements are in place for taxpayers who would need to complete this schedule and who have substituted accounting periods (ending 31 December 2011 in lieu of 30 June 2012). If lodging prior to 1 July 2012, you will need to comply with existing reporting requirements such as Schedule 25A, thin capitalisation schedule or international dealings schedule - financial services.
Approximately 11,000 taxpayers are expected to complete the IDS 2012 and the majority will be from the small-to-medium enterprise (SME) market.
The IDS 2012 will replace the Schedule 25A and thin capitalisation schedules.
The refined schedule is aimed to:
- make it easier for you to complete
- reduce your cost of compliance
- better align with your current record keeping systems
- improve data capture for more effective risk identification and assessment.
Feedback from the consultation with the National Tax Liaison Group International sub-committee IDS working group and 32 industry and taxpayer forums and associations has assisted in the development of the IDS 2012 and its instructions.
The release of Access Manager, scheduled for late November 2011, has been postponed until early 2012. Until then, you should continue to manage access and permissions for the Tax Agent Portal, BAS Agent Portal and Business Portal using the existing Online Access Manager function in the portals.
For more information, refer to Access Manager.
For more information which may help your business, visit our Businesses home page.
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Last Modified: Friday, 17 February 2012